The EU Commission has ruled that 571.9m euros (£498m) of restructuring aid that the French government is offering to struggling PSA Peugeot Citroën doesn't contravene European state aid laws.
The decision, made yesterday, came after an in-depth Commission investigation into whether the financial aid would distort the new car market or unfairly hamper PSA Peugeot Citroën's rivals that are not receiving such help. The Commission concluded that the restructuring plan, together with undertakings made by the French authorities, will enable the PSA group to return to viability.
"Following an in-depth investigation, we have arrived at a formula which allows PSA to restructure in accordance with clear limits, reducing to a minimum the damaging effects for competitors who have not received support from public funding. This is a balanced result which offers the PSA group the chance to make a new start on a sound basis," said Joaquín Almunia, Vice-President of the EU Commission with responsibility for competition policy.
Last summer PSA laid out a restructuring plan that involves measures such as halting production at its Aulnay plant and cutting more than 11,000 jobs across its business.
As part of the restructuring aid, PSA Peugeot Citroën will receive a repayable advance of 85.9m euros to implement its '50CO2Cars' research and development project, which is focused on producing low-emissions vehicles and engines. Another part of the aid deal stipulates that the PSA group will have to contribute to the cost of its restructuring through a sale of assets.
PSA Peugeot Citroën's mid-year financial results, issued today, suggest that its alliance with General Motors and the raft of cost-cutting measures implemented over the past 12 months are beginning to have a positive effect on the group's health. Strong car sales in China, where Peugeot Citroen enjoyed a 33 per cent year-on-year sales increase, helped to offset the continuing stagnation of the European market.
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PSA need to deal with their image. There are still too many people with perceptions that French cars are unreliable and badly built - that German cars are the best. Also the ability for people to borrow so easily to buy cars now has meant people can buy cars with the 'right badge' on the car. In terms of build quality - the french cars are nearly up with their German counterparts now - in terms of reliability I think PSA have improved to the extent where they are now ahead of the Germans (which are completely overrated in this regard). Obviously these are not the only factors which have made PSA struggle - their home & key markets have been impacted by the financial slump and restructuring is very expensive along with some very important investment within the business - i.e. EMP2 platform. It will be interesting to see how they grow the brands and how they differentiate themselves. I know there are a lot of French car haters on these websites - including some of the car magazines as they are car snobs too! You only have to look at every car magazine's website and every time you log on there is a german car on the front all the time. I personally like choice and think there definitely a place for PSA's cars today.
The PSA group have many cars
The PSA group have many cars that sell very well, like the 2008, 208 and yes the 308 is still one of Europes best selling cars, the Picasso's in the Citroen range also are great sellers, the trouble is that dealers disocunt the cars by such huge volumes, that people wont touch them due to even bigger drops in 2nd hand values.
Their reliability is not too bad these days, and on a par with some supposed German quality marques, both Peugeot an Citroen must survive, the would will be a poorer place with out them.
The same however was said for Saab and Rover, so looking logically, if they went, who would care, people would just go to another brand, and that would most likely be VW, which cars are truely dull as ditchwater, we need the French flair.
indeed
Well, for years it was the other way round of course, every Peugeot was greeted with joy for the way it drove - the clarity of vision got dulled along the line somewhere and has been reflected in the reviews.
To be honest the mags don't rave all that much about the BMW, VAG stuff at the moment - mainly 4 stars everywhere. Stiff rides and lifeless steering systems.
Problem with a well selling 208 is the margins on the small car segment aren't really there - something like the XY is supposed to help in that regard.
Don't get the DS's myself - they just look too tall, frumpy and over-detailed. Those walrus running lights on the DS3. Hmm. Each to their own though. We need PSA or we'll be doomed with more VAG domination for ever....